What to do if you can't afford your mortgage
Interest rates are starting to impact the housing market with some homeowners at the brink of affordability.
After eight consecutive hikes, Bank of Canada interest rates are now being held steady at four and a half per cent.
“And that’s just the Bank Of Canada rate, that’s not what people are getting mortgages for,” Real Estate Broker, Tony Johal said. “Keep in mind there’s a stress test now as well.”
Those with fixed rate mortgages who are currently paying one or two per cent interest and are coming up for renewal are feeling the pressure.
Meanwhile, variable rate homeowners have already been feeling the pinch.
“Of course one of the things people do consider right away is downsizing their house and downsizing their mortgage just to get it back in line with their lifestyle,” Johal said. “One of the big reasons that people are contacting us these days is quite simply because the rates have made somebody’s payments on a mortgage renewal very, very expensive.”
But a smaller home, isn't the only road to a smaller mortgage.
“Get a professional on the line, and just let them run down your finances, your mortgage payments, all that stuff. Don't leave it to the last minute,” Mortgage Agent, Michael Kitts explained.
Richard Kitts says talking to an expert, even a year before your renewal, if you can, will allow you to start mapping out a plan.
“There is ways of maybe reducing the payments. Longer amortizations, there is interest-only programs out there which you have to be careful with to explore them but I think the main thing at this point is try not to panic, rates are steady now,” Richard said. “The halt on these rates will help out, at least it will keep us level and find a balance to everything.”
When talking to their lenders, homeowners can also ask about skipping a payment or using the equity they already have in their home.
“There is not a one size fits all solution and speaking with a mortgage professional is probably a good idea,” Richard said.
As far as the local market is concerned, overall prices are decreasing but inventory remains low.
Buyers are being approved for less than they would have liked and some sellers are scared they won’t get as much for their home as they feel they deserve in a time period they would like.
“It’s like a ripple effect within everything,” Johal said.
The Bank of Canada’s next scheduled rate announcement is set for April 12th.
CTVNews.ca Top Stories
'One of the single most terrifying things ever': Ontario couple among passengers on sinking tour boat in Dominican Republic
A Toronto couple are speaking out about their 'extremely dangerous' experience on board a sinking tour boat in the Dominican Republic last week.
What Canadians think of the latest Liberal budget
A new poll suggests the Liberals have not won over voters with their latest budget, though there is broad support for their plan to build millions of homes.
opinion Why you should protect your investments by naming a trusted contact person
Appointing a trusted person to help with financial obligations can give you peace of mind. In his personal finance column for CTVNews.ca, Christopher Liew outlines the key benefits of naming a confidant to take over your financial responsibilities, if the need ever arises.
Teacher shortages see some Ontario high school students awarded perfect grades on midterm exams
Students at a high school in York Region have been awarded perfect marks on their midterm exams in three subjects – not because of their academic performances however, but because they had no teacher.
'My stomach dropped': Winnipeg man speaks out after being criminally harassed following single online date
A Winnipeg man said a single date gone wrong led to years of criminal harassment, false arrests, stress and depression.
Photographer alleges he was forced to watch Megan Thee Stallion have sex and was unfairly fired
A photographer who worked for Megan Thee Stallion said in a lawsuit filed Tuesday that he was forced to watch her have sex, was unfairly fired soon after and was abused as her employee.
Ottawa injects another $36M into vaccine injury compensation fund
The federal government has added $36.4 million to a program designed to support people who have been seriously injured or killed by vaccines since the end of 2020.
An Ontario senior thought he called Geek Squad for help with his printer. Instead, he got scammed out of $25,000
An Ontario senior’s attempt to get technical help online led him into a spoofing scam where he lost $25,000. Now, he’s sharing his story to warn others.
Her fiance has been in prison for 49 years. She's trying to free him before it's too late
Christine Roess is a retired consultant. Ezra Bozeman has spent the last 49 years in prison, serving a life sentence for a murder he says he didn’t commit. Against the odds, the two fell in love.